Managed Care Analysis

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Managed health care has made significant contributions to the health care delivery system. There is documentation of what is now termed health maintenance organizations or HMOs as early as the early1900’s. Health maintenance organizations, preferred provider organizations (PPO) and point of service plans (POS) are the most familiar types of managed care plans. The beginning of these plans came about because providers wanted to maintain and enhance patient revenues. What started out as a simple concept has evolved into an on-going complex health care delivery system. This paper will discuss the evolution and current trends of managed care.
Managed care means to deliver services in ways that improve quality and controls cost. Managed care plans
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Initially created for lumber mill owners and their employees, the program served to ensure revenue for the clinic. The program was officially named HMO in the 1970’s. The HMO Act was passed in 1973. According to the HMO Act: grants and loans were available for the planning and startup phases of new HMOs as well as for service area expansions for existing HMOs; state laws that restricted the development of HMOs were overridden for HMOs that were federally qualified; employers with 25 or more employees that offered indemnity coverage to also offer the closed panel and the open panel model (Kongstvedt, 2013, pg 7). HMO plans are the most restrictive. They require members to use physicians and hospitals from a network of providers with which the HMO has negotiated rates (Kongstvedt, 2013). HMOs covered preventative services and prescription drugs. The focus of the HMO plan was managing utilization and changing the payment system to better align the HMO with those of …show more content…
Unlike HMO plans, the PPO plan allows more freedom to its members. PPO plans allow its members to choose physicians inside or outside of the health plan network. Those members that choose to have out of network physicians pay an additional cost for this benefit.
The term PPO was created because providers who agreed to discounted fees were considered preferred. PPOs contract directly with providers and hospitals. As a result, PPOs are able to negotiate low, competitive, fixed rates (Saunier, 2011). The emergence of coordination of services and utilization review is also noted. These utilization controls contributed to major practice changes such as shortening hospital length of stay (Kongstvedt, 2013). Furthermore, employee wellness programs became more prevalent. Programs include screening, exercise promotion, weight loss support and mental health counseling.
POS plans combine elements of HMOs and PPOs. This plan was introduced in the mid to late 1990s. Members select in-network primary care physicians and may choose out of network providers. Members will pay higher deductibles and co-insurances for this benefit or may utilize referrals from their primary care physician. Unfortunately, due to high costs the POS plans

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